Question 1

Which of the following pairs of goods is probably NOT an example of substitutes?

Accepted Answer

A)  Raincoats and umbrellas 
B)  Chicken and steak 
C)  Potatoes and stuffing 
D)  Hamburgers and ketchup 
A)  Raincoats and umbrellas 
B)  Chicken and steak 
C)  Potatoes and stuffing 
D)  Hamburgers and ketchup D

Question 2

What is the maximum amount of good Y that can be purchased if X and Y are the only two goods available for purchase and Px = $5,Py = $10,X = 20,and M = 500?

Accepted Answer

A)  40 
B)  25 
C)  50 
D)  75 
A)  40 
B)  25 
C)  50 
D)  75 A

Question 3

Some individuals choose to undertake risky prospects while others choose safer ones because they have different:

Accepted Answer

A)  degrees of transitivity. 
B)  marginal rates of substitution between risk and reward. 
C)  income elasticities. 
D)  marginal utilities. 
A)  degrees of transitivity. 
B)  marginal rates of substitution between risk and reward. 
C)  income elasticities. 
D)  marginal utilities. B

Question 4

A stockholder named Sue must cast a vote for chair of the board.Sue prefers Mr.Lee to Ms.Doe,Ms.Doe to Mr.James,and Mr.James to Mr.Lee.
a.Are Sue's preferences consistent with our assumptions about consumer behavior?
 
b.If all stockholders had the same preferences as Sue,who would win the appointment as chair of the board?

Accepted Answer

a.No,her preferences are not consistent

Question 5

A cash gift causes the budget line to:

Accepted Answer

A)  shift to the right in a parallel fashion. 
B)  shift to the left in a parallel fashion. 
C)  rotate clockwise. 
D)  None of the preceding statements is correct. 
A)  shift to the right in a parallel fashion. 
B)  shift to the left in a parallel fashion. 
C)  rotate clockwise. 
D)  None of the preceding statements is correct.

Question 6

When the price of a good increases with other things unchanged,the real income of the consumer:

Accepted Answer

A)  is unchanged. 
B)  increases. 
C)  decreases. 
D)  None of the preceding statements is correct. 
A)  is unchanged. 
B)  increases. 
C)  decreases. 
D)  None of the preceding statements is correct.

Question 7

At the equilibrium consumption bundle,which of the following holds?

Accepted Answer

A)  MRSX,Y = PX /PY. 
B)  MRSX,Y = −PX /PY. 
C)  MRSX,Y = −PY /PX. 
D)  MRSX,Y = PY /PX. 
A)  MRSX,Y = PX /PY. 
B)  MRSX,Y = −PX /PY. 
C)  MRSX,Y = −PY /PX. 
D)  MRSX,Y = PY /PX.

Question 8

Managers can get workers to work longer hours:

Accepted Answer

A)  by increasing wages on all hours worked. 
B)  by lowering wages on all hours worked. 
C)  with higher overtime pay in excess of regular hourly pay. 
D)  with lower overtime pay in excess of regular hourly pay. 
A)  by increasing wages on all hours worked. 
B)  by lowering wages on all hours worked. 
C)  with higher overtime pay in excess of regular hourly pay. 
D)  with lower overtime pay in excess of regular hourly pay.

Question 9

Running a supermarket involves:

Accepted Answer

A)  a lower level of risk than running a gourmet shop. 
B)  a higher level of risk than running a gourmet shop. 
C)  the same level of risk as running a gourmet shop. 
D)  All of the statements associated with this question are correct. 
A)  a lower level of risk than running a gourmet shop. 
B)  a higher level of risk than running a gourmet shop. 
C)  the same level of risk as running a gourmet shop. 
D)  All of the statements associated with this question are correct.

Question 10

If the slope of the indifference curve is steeper than the slope of the budget line,and X is on the horizontal axis:

Accepted Answer

A)  the consumer is willing to give up more of good Y to get an additional unit of good X than is necessary under the current market prices. 
B)  MRS X /PY. 
C)  MRS X /PY. 
D)  the consumer is willing to give up more of good X to get an additional unit of good Y than is necessary under the current market prices. 
A)  the consumer is willing to give up more of good Y to get an additional unit of good X than is necessary under the current market prices. 
B)  MRS X /PY. 
C)  MRS X /PY. 
D)  the consumer is willing to give up more of good X to get an additional unit of good Y than is necessary under the current market prices.

Question 11

The idea that a consumer is limited to selecting a bundle of goods that is affordable is captured by the:

Accepted Answer

A)  budget constraint. 
B)  indifference curve. 
C)  consumer equilibrium. 
D)  price changes. 
A)  budget constraint. 
B)  indifference curve. 
C)  consumer equilibrium. 
D)  price changes.

Question 12

Suppose a manager views both quantity and profit as "goods." Such a manager will then have an indifference curve that:

Accepted Answer

A)  is tangent to the profit curve somewhere between quantities of 0 and 2.5. 
B)  is tangent to the profit curve somewhere between quantities of 2.5 and 5. 
C)  intersects the profit curve at a quantity exactly equal to 2.5. 
D)  intersects the profit curve at a quantity exactly equal to 5. 
A)  is tangent to the profit curve somewhere between quantities of 0 and 2.5. 
B)  is tangent to the profit curve somewhere between quantities of 2.5 and 5. 
C)  intersects the profit curve at a quantity exactly equal to 2.5. 
D)  intersects the profit curve at a quantity exactly equal to 5.

Question 13

What is the maximum amount of good X that can be purchased if X and Y are the only two goods available for purchase and Px = $10,Py = $20,Y = 5,and M = 400?

Accepted Answer

A)  80 
B)  20 
C)  40 
D)  30 
A)  80 
B)  20 
C)  40 
D)  30

Question 14

Which combination of the following properties rules out indifference curves that intersect one another?

Accepted Answer

A)  Completeness and diminishing marginal rate of substitution 
B)  Transitivity and more-is-better 
C)  More-is-better and diminishing marginal rate of substitution 
D)  Completeness and more-is-better 
A)  Completeness and diminishing marginal rate of substitution 
B)  Transitivity and more-is-better 
C)  More-is-better and diminishing marginal rate of substitution 
D)  Completeness and more-is-better

Question 15

The affordable bundle that yields the greatest satisfaction to the consumer is:

Accepted Answer

A)  the maximum bundle. 
B)  the equilibrium consumption bundle. 
C)  the allowable purchasing bundle. 
D)  the most popular bundle. 
A)  the maximum bundle. 
B)  the equilibrium consumption bundle. 
C)  the allowable purchasing bundle. 
D)  the most popular bundle.

Question 16

Kate's money income is $350,the price of X is $4,and the price of Y is $6.Given these prices and income,Kate buys 50 units of X and 25 units of Y.Call this combination of X and Y bundle J.At bundle J,Kate's MRS is 3.At bundle J,if Kate increases consumption of Y by 1 unit,how many units of X can she give up and still reach the same level of utility?

Accepted Answer

A)  1 
B)  1/3 
C)  3 
D)  2/3 
A)  1 
B)  1/3 
C)  3 
D)  2/3

Question 17

The possibility of the endless cyclical preference is eliminated by the property of:

Accepted Answer

A)  completeness. 
B)  more and better. 
C)  diminishing marginal rate of substitution. 
D)  transitivity. 
A)  completeness. 
B)  more and better. 
C)  diminishing marginal rate of substitution. 
D)  transitivity.

Question 18

Suppose a consumer with an income of $100 is faced with Px = 1 and Py = 1/2.What is the market rate of substitution between good X (horizontal axis)and good Y (vertical axis)?

Accepted Answer

A)  0.50 
B)  -1.0 
C)  -2.0 
D)  -4.0 
A)  0.50 
B)  -1.0 
C)  -2.0 
D)  -4.0

Question 19

Suppose you are the manager of a firm that produces Ultrasweet,a sugar substitute.Show graphically the effect of a reduction in the price of Sweet and Healthy,a competitor's product,on a typical consumer's consumption of Ultrasweet.

Accepted Answer

A reduction in the price of Sweet and He

Question 20

If widgets and gidgets are complements and both are normal goods,then a decrease in the demand for widgets will result from:

Accepted Answer

A)  an increase in the price of widgets. 
B)  a decrease in income. 
C)  a decrease in the price of gidgets. 
D)  a decrease in the price of gidgets and a decrease in income. 
A)  an increase in the price of widgets. 
B)  a decrease in income. 
C)  a decrease in the price of gidgets. 
D)  a decrease in the price of gidgets and a decrease in income.

Which of the following pairs of goods is probably NOT an example of substitutes?

What is the maximum amount of good Y that can be purchased if X and Y are the only two goods available for purchase and P_x = $5,P_y = $10,X = 20,and M = 500?

Some individuals choose to undertake risky prospects while others choose safer ones because they have different:

A cash gift causes the budget line to:

When the price of a good increases with other things unchanged,the real income of the consumer:

At the equilibrium consumption bundle,which of the following holds?

Managers can get workers to work longer hours:

Running a supermarket involves:

If the slope of the indifference curve is steeper than the slope of the budget line,and X is on the horizontal axis:

The idea that a consumer is limited to selecting a bundle of goods that is affordable is captured by the:

Suppose a manager views both quantity and profit as "goods." Such a manager will then have an indifference curve that:

What is the maximum amount of good X that can be purchased if X and Y are the only two goods available for purchase and P_x = $10,P_y = $20,Y = 5,and M = 400?

Which combination of the following properties rules out indifference curves that intersect one another?

The affordable bundle that yields the greatest satisfaction to the consumer is:

The possibility of the endless cyclical preference is eliminated by the property of:

Suppose a consumer with an income of $100 is faced with P_x = 1 and P_y = 1/2.What is the market rate of substitution between good X (horizontal axis)and good Y (vertical axis)?

Suppose you are the manager of a firm that produces Ultrasweet,a sugar substitute.Show graphically the effect of a reduction in the price of Sweet and Healthy,a competitor's product,on a typical consumer's consumption of Ultrasweet.

If widgets and gidgets are complements and both are normal goods,then a decrease in the demand for widgets will result from:

The Fundamentals of Managerial Economics

Market Forces: Demand and Supply

Quantitative Demand Analysis

The Production Process and Costs

The Organization of the Firm

The Nature of Industry

Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets

Basic Oligopoly Models

Game Theory: Inside Oligopoly

Pricing Strategies for Firms With Market Power

The Economics of Information

Advanced Topics in Business Strategy

A Managers Guide to Government in the Marketplace

Filters

Exam 4: The Theory of Individual Behavior

Which of the following pairs of goods is probably NOT an example of substitutes?

What is the maximum amount of good Y that can be purchased if X and Y are the only two goods available for purchase and Px = $5,Py = $10,X = 20,and M = 500?

Some individuals choose to undertake risky prospects while others choose safer ones because they have different:

A cash gift causes the budget line to:

When the price of a good increases with other things unchanged,the real income of the consumer:

At the equilibrium consumption bundle,which of the following holds?

Managers can get workers to work longer hours:

Running a supermarket involves:

If the slope of the indifference curve is steeper than the slope of the budget line,and X is on the horizontal axis:

The idea that a consumer is limited to selecting a bundle of goods that is affordable is captured by the:

Suppose a manager views both quantity and profit as "goods." Such a manager will then have an indifference curve that:

What is the maximum amount of good X that can be purchased if X and Y are the only two goods available for purchase and Px = $10,Py = $20,Y = 5,and M = 400?

Which combination of the following properties rules out indifference curves that intersect one another?

The affordable bundle that yields the greatest satisfaction to the consumer is:

The possibility of the endless cyclical preference is eliminated by the property of:

Suppose a consumer with an income of $100 is faced with Px = 1 and Py = 1/2.What is the market rate of substitution between good X (horizontal axis)and good Y (vertical axis)?

Suppose you are the manager of a firm that produces Ultrasweet,a sugar substitute.Show graphically the effect of a reduction in the price of Sweet and Healthy,a competitor's product,on a typical consumer's consumption of Ultrasweet.

If widgets and gidgets are complements and both are normal goods,then a decrease in the demand for widgets will result from:

The Fundamentals of Managerial Economics

Market Forces: Demand and Supply

Quantitative Demand Analysis

The Production Process and Costs

The Organization of the Firm

The Nature of Industry

Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets

Basic Oligopoly Models

Game Theory: Inside Oligopoly

Pricing Strategies for Firms With Market Power

The Economics of Information

Advanced Topics in Business Strategy

A Managers Guide to Government in the Marketplace

Filters

What is the maximum amount of good Y that can be purchased if X and Y are the only two goods available for purchase and P_x = $5,P_y = $10,X = 20,and M = 500?

What is the maximum amount of good X that can be purchased if X and Y are the only two goods available for purchase and P_x = $10,P_y = $20,Y = 5,and M = 400?

Suppose a consumer with an income of $100 is faced with P_x = 1 and P_y = 1/2.What is the market rate of substitution between good X (horizontal axis)and good Y (vertical axis)?